Ford Motor Company v. Blue Cross Blue Shield of Michigan Mutual Insurance Company et al
Filing
30
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' 19 AND 20 MOTIONS TO DISMISS UNDER RULE 12(b)(6) Signed by District Judge Linda V. Parker. (AFla)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
FORD MOTOR COMPANY,
Plaintiff,
Civil Case No. 23-11286
Honorable Linda V. Parker
v.
BLUE CROSS BLUE SHIELD OF
MICHIGAN MUTUAL
INSURANCE COMPANY and
THE BLUE CROSS BLUE
SHIELD ASSOCIATION,
Defendants.
________________________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTIONS TO DISMISS (ECF NOS. 19, 20) UNDER RULE
12(b)(6)
These matters are before the Court on Blue Cross Blue Shield of Michigan
Mutual Insurance Company (“Defendant BCBSM”) and The Blue Cross Blue
Shield Association (“Defendant BCBSA”) (collectively “Defendants”)’s motions
to dismiss pursuant Rule 12(b)(6) of the Federal Rules of Civil Procedure (ECF
Nos. 19-20) 1 Plaintiff Ford Motor Company (hereinafter “Ford”)’s complaint
which alleges violations of the Sherman Act, 15 U.S.C. §§ 1–7.
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1
Defendant BCBSM incorporates the arguments asserted in Defendant BCBSA’s
brief in support of dismissal. (ECF No. 19 at PageID. 370-71.) Additionally,
while neither Defendant BCBSM nor Ford attached to their filings certificates of
(cont’d …)
The motions have been fully briefed. (ECF Nos. 19-20, 23-25.) 2 Finding
the facts and legal arguments adequately presented in the parties’ filings, the Court
is dispensing with oral argument pursuant to Eastern District of Michigan Local
Rule 7.1(f). For the following reasons, the Court is granting in part and denying in
part Defendants’ motions to dismiss.
I.
Legal Standard
A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of
the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134
(6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must
contain a “short and plain statement of the claim showing that the pleader is
entitled to relief.” To survive a motion to dismiss, a complaint need not contain
“detailed factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if
it tenders ‘naked assertions’ devoid of ‘further factual enhancement.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557).
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compliance with Local Rule 5.1, Ford’s response brief (ECF No. 23) fails to
comply with Local Rule 5.1(a)(3)’s font size requirements. See Local Rule
5.1(a)(3) (“Except for standard preprinted forms that are in general use, type size
of all text and footnotes must be no smaller than 10-1/2 characters per inch (nonproportional) or 14 point (proportional).”)
2
The Court also considered the supplement authority filed by the parties. (ECF
Nos. 27-29.)
2
As the Supreme Court provided in Iqbal and Twombly, “[t]o survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly,
550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The
plausibility standard “does not impose a probability requirement at the pleading
stage; it simply calls for enough facts to raise a reasonable expectation that
discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556.
In deciding whether the plaintiff has set forth a “plausible” claim, the court
must accept the factual allegations in the complaint as true. Erickson v. Pardus,
551 U.S. 89, 94 (2007). This presumption, however, is not applicable to legal
conclusions. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 555).
Ordinarily, the court may not consider matters outside of the pleadings when
deciding a Rule 12(b)(6) motion to dismiss. Weiner v. Klais & Co., Inc., 108 F.3d
86, 88 (6th Cir. 1997) (citing Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir.
1989)). A court that considers such matters must first convert the motion to
dismiss to one for summary judgment. See Fed. R. Civ. P 12(d). However,
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“[w]hen a court is presented with a Rule 12(b)(6) motion, it may consider the
[c]omplaint and any exhibits attached thereto, public records, items appearing in
the record of the case and exhibits attached to [the] defendant’s motion to dismiss,
so long as they are referred to in the [c]omplaint and are central to the claims
contained therein.” Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430
(6th Cir. 2008). “Such public records that a court may consider include documents
from other court proceedings.” Watermark Senior Living Ret. Communities, Inc. v.
Morrison Mgmt. Specialist, Inc., 905 F.3d 421, 425-26 (6th Cir. 2018) (citation
omitted).
II.
Factual Background
Ford is one of the largest automobile manufacturers in the United States and
has over 170,000 employees worldwide. (ECF No. 1 ¶ 15.) Defendant BCBSA is
a corporation owned and controlled by thirty-six health insurance plans that
operate under the Blue Cross Blue Shield (“BCBS”) trade names and trademarks.
(Id. ¶ 17.) Defendant BCBSM is the exclusive health insurance plan operating
under the BCBS trade names and trademarks in the State of Michigan. (Id. ¶ 16.)
It is also one of the thirty-six health insurance plans that make-up Defendant
BCBSA. (Id. ¶ 17.)
Ford’s complaint, in part, relates to a multi-district class action litigation
styled as In re Blue Cross Blue Shield Antitrust Litig., 2:13-CV-20000-RDP (N.D.
4
Ala.), where claims against the named Defendants, as well as others, were alleged
for violations of the Sherman Act. (Id. ¶ 4.)
Here, Ford alleges that Defendants, as part of a larger conspiracy, have
divided territory and fixed prices, while reducing competition and increasing the
cost of health services. (Id. ¶ 1.) Specifically, it alleges that Defendants conspired
to restrict output and to allocate customers across the United States, which resulted
in it being overcharged for the commercial health insurance products it purchased
from certain BCBS entities (“BCBS Entities”), including Defendant BCBSM and
other nonparty entities. (Id. ¶ 2.) It also alleges that BCBS Entities use the Blue
Cross Blue Shield trademark and license (“BCBS Licensees”). (Id. ¶ 8.)
Specifically, Ford asserts that it purchased health insurance products offered
by Defendant BCBSM, including: (a) traditional insurance products in which it
paid a premium in exchange for BCBS Entities insuring employee plan members
against the cost of medical care; and (b) Administrative Services Only (“ASO”)
products, whereby it purchased administrative services from BCBS Entities and an
account funded by Ford (that is, a self-funded account) paid for or reimbursed the
costs of medical care. (Id. ¶ 7.) It alleges that Defendants successfully conspired
with BCBS Licensees to create Exclusive Service Areas (“ESAs”) – geographic
boundaries in which all other BCBS Licensees would not compete – making each
individual BCBS Licensee the exclusive provider of certain insurance products and
5
services in that territory. (Id. ¶ 8.) It further alleges that this reduces the overall
number of insurers in one region, thereby reducing competition between the BCBS
Licensees. (Id.)
In summary, Ford contends that Defendants engaged in a horizontal
conspiracy to divide geographic territory, resulting in it paying higher premiums
for traditional insurance products and higher fees and costs for ASO services. (Id.
¶ 9.) The horizontal conspiracy, it alleges, is the result of two rules: (1) the Local
Best Efforts Rule; and (2) the National Best Efforts Rule. (Id. ¶¶ 43-44.)
The Local Best Efforts Rule reads that: “[a]t least 80% of the annual
Combined Local Net Revenue of a controlled affiliate attributable to health care
plans and related services . . . offered within the designated Service Area must be
sold, marketed, administered or underwritten under the Licensed Marks and
Names.” (Id. ¶ 43.) Ford alleges that this Rule discourages the ability of each
BCBS Licensee to generate revenue from non-Blue Brand business within its ESA.
(Id. ¶ 62.)
The National Best Efforts Rule reads that: “[a]t least 66 2/3% of the annual
Combined National Net Revenue of the Controlled Affiliate[] attributable to health
care plans and related services . . . must be sold, marketed, administered or
6
underwritten under the Licensed Marks and Names.” (Id. ¶ 44.) 3 Ford argues that
the National Best Efforts Rule also discourages each BCBS Licensee from both
developing substantial non-Blue Brand business and competing outside of its ESA.
(Id. ¶¶ 63, 64.)
Ford continues by alleging that a BCBS Licensee’s failure to comply with
the above rules could result in discipline up to and including termination of a
member plan’s license. (Id. ¶ 49.) It alleges that this is a powerful incentive to
remain in the Association, as a terminated BCBS Licensee would lose the right to
use the Blue Brand and would also be required to fund the establishment of a
competing Blue Brand health insurer in its ESA. (Id. ¶ 50.)
Lastly, Ford alleges that the above restrictions are per se violations of the
Sherman Act. (Id. ¶ 66.) Arguing specifically that the inability of BCBS
Licensees to generate revenue outside of their ESAs constitutes horizontal
agreements between competitors to divide and allocate geographic markets are
violations of the Sherman Act. (Id.) Ford now brings the instant complaint
alleging two violations of § 1 of the Sherman Act: (1) claims arising from its
purchase of health insurance; and (2) claims arising from its purchase of ASO
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Ford argues that the National Best Effort Rule was repealed in 2022 but the
restrictions are still in place. (See ECF No. 1 ¶ 66, n.22.)
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products. (Id. ¶ 121.) In addition to damages, Ford also seeks injunctive relief.
(Id. ¶ 123(e).)
A.
Parties’ Arguments
Defendants label their motions as seeking dismissal pursuant to Federal Rule
of Civil Procedure 12(b)(6) for failure to state a claim, but their first argument
seeks dismissal for lack of standing for failing to argue an antitrust injury. Their
remaining arguments state that Ford: (a) fails to allege an anticompetitive effect;
(b) fails to allege market power; and (c) its claims are timed barred by both the
statute of limitations and the laches doctrine. They further argue that the
“continuing violation” doctrine does not apply.
In response, Ford argues that: (1) it has sufficiently pled an antitrust injury
through allegations of a horizontal conspiracy; (2) it pled anticompetitive effects;
(3) despite it being unnecessary, pled market power; and (4) its claims are not time
barred. The Court will address each in turn.
III.
Applicable Law and Analysis
The antitrust laws of the United States aim to protect consumers by
maintaining competitive markets. To that end, § 1 of the Sherman Act prohibits
agreements that unreasonably restrain trade by restricting production, raising
prices, or otherwise manipulating markets to the detriment of consumers. See 15
U.S.C. § 1; State Oil Co. v. Khan, 522 U.S. 3, 10 (1997); Apex Hosiery Co. v.
8
Leader, 310 U.S. 469, 493 (1940). The Supreme Court has recognized that certain
horizontal agreements “always or almost always tend to restrict competition and
decrease output.” Broadcast Music, Inc. v. CBS, 441 U.S. 1, 19–20 (1979).
Examples of “horizontal agreements” include agreements between
competitors to divide markets, refuse to deal, and fix prices. See, e.g., United
States v. Trenton Potteries Co., 273 U.S. 392, 397 (1927) (“The aim and result of
every price-fixing agreement, if effective, is the elimination of one form of
competition. . . . Agreements which create such potential power may well be held
to be in themselves unreasonable or unlawful restraints”); United States v. Topco
Assocs., 405 U.S. 596, 608 (1972) (“One of the classic examples of a per se
violation of § 1 is an agreement between competitors at the same level of the
market structure to allocate territories in order to minimize competition”); Nw.
Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 293
(1985) (“‘Group boycotts’ are often listed among the classes of economic activity
that merit per se invalidation under § 1”). 4
A.
Antitrust Injury
Ford must first establish that it has standing. Defendants argue that Ford
lacks standing as it has failed to establish an antitrust injury. The Supreme Court
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4
“Group boycotts” are “concerted refusals by traders to deal with other traders.”
Com-Tel, Inc. v. DuKane, Corp., 669 F.2d 404, 408 n.4 (1982) (quoting Klor’s,
Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 212 (1959) (footnote deleted)).
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has described the “antitrust injury” requirement as a “necessary, but not always
sufficient” component of antitrust standing. Cargill, Inc. v. Monfort of Colo., Inc.,
479 U.S. 104, 110 n.5 (1986). Where a complaint fails to establish an antitrust
injury, the court must dismiss it as a matter of law. NicSand, Inc. v. 3M Co., 507
F.3d 442, 450 (6th Cir. 2007) (en banc) (explaining that “antitrust standing is a
threshold, pleading-stage inquiry and when a complaint by its terms fails to
establish this requirement we must dismiss it as a matter of law—lest the antitrust
laws become a treble-damages sword rather than the shield against competitiondestroying conduct that Congress meant it to be”).
To establish an antitrust injury, a plaintiff must show an “injury causally
linked” to an alleged anti-competitive practice and that the injury is “of the type
the antitrust laws were intended to prevent and that flows from that which makes
the defendants’ acts unlawful.” Cargill, 479 U.S. at 109 (quoting Brunswick Corp.
v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)). “[E]ven though a
claimant alleges that an injury is ‘causally related to an antitrust violation,’ it ‘will
not qualify as ‘antitrust injury’ unless it is attributable to an anticompetitive aspect
of the practice under scrutiny.’” NicSand, 507 F.3d at 451 (quoting Atl. Richfield
Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990)).
Here, Ford alleges that its injury—paying higher premiums for traditional
insurances products and higher fees and costs for ASO services—is the result of a
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“horizontal agreement” between the Defendant BCBSA and its members,
including Defendant BCBSM. Defendants argue that Ford’s injury, if any, is
foreclosed as a matter of trademark law as any injury is a function of the lawful use
and management of trademarks and not any anticompetitive effect.
“An agreement ‘between competitors at the same level of the market
structure’ is horizontal.” In re Se. Milk Antitrust Litig., 739 F.3d 262, 272 (6th Cir,
2014) (quoting Sancap Abrasives Corp. v. Swiss Indus. Abrasives, 19 F. App’x.
181, 191 (6th Cir. 2001)). Horizontal agreements or restraints have been
characterized as “naked restraints of trade with no purpose except stifling
competition.” Com-Tel, Inc. v. DuKane, Corp., 669 F.2d 404, 409 (6th Cir. 1982)
(internal citation omitted). Moreover, “paying higher prices for a product due to a
lack of competition in the market[] is the kind of injury that can . . . flow from the
anticompetitive effects of . . . []a horizontal market allocation agreement[].” In re
Cardizem CD Antitrust Litig., 332 F.3d 896, 911 (6th Cir. 2003). Ford’s alleged
injury of paying higher prices as a result of a “horizontal agreement” amongst and
between Defendants is the type of injury the Sherman Act sought to prevent.
Additionally, while Defendants argue that Ford’s injury is foreclosed as a
matter of trademark law, the Supreme Court has stated that a “trademark cannot be
legally used as a device for [a] Sherman Act violation. Indeed the Trade Mark Act
of 1946 itself penalizes use of a mark ‘to violate the antitrust laws of the United
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States.’” Timken Roller Bearing Co. v. U.S., 341 U.S. 593, 599 (1951) (quoting 15
U.S. C. § 1115(b)(7)) modified on other grounds by Copperweld Corp. v. Indep.
Tube Corp., 467 U.S. 752 (1984)). Therefore, Ford’s complaint has adequately
alleged an antitrust injury.
B.
Market Power and Anticompetitive Effect
To establish a violation of § 1 of the Sherman Act, a plaintiff must
demonstrate that there is: 1) an agreement, which may be in the form of a contract,
combination, or conspiracy; 2) affecting interstate commerce; 3) that imposes an
unreasonable restraint on trade. Hobart-Mayfield, Inc. v. Nat’l Operating Comm.
on Standards for Athletic Equip., 48 F.4th 656, 663 (6th Cir. 2022) (citing White &
White, Inc. v. Am. Hosp. Supply Corp., 723 F.2d 495, 504 (6th Cir. 1983)).
Ford’s complaint met the first element by adequately alleging an agreement
between parties to divide markets and restrict trade. Such agreements are
inherently anticompetitive and are per se violations of the Sherman Act.
Moreover, once a horizontal agreement has been established, no further inquiry
into the practice’s effect on the market or the parties’ intentions is required to
establish a § 1 Sherman Act violation. N. Pac. Ry. v. United States, 356 U.S. 1, 5
(1958) (“This principle of per se unreasonableness . . . avoids the necessity for an
incredibly complicated and prolonged economic investigation into the entire
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history of the industry involved . . . an inquiry so often wholly fruitless when
undertaken.”).
i.
Market Power
Typically, “a plaintiff must show that the defendant has market power in
order to show an unreasonable restraint of trade.” Lie v. St. Joseph Hosp. of Mount
Clemens, Mich., 964 F.2d 567, 568 (6th Cir. 1992). Section 1 of the Sherman Act
is concerned with firms that exercise market power – a “special ability . . . to force
[a contracting partner] to do something that he would not do in a competitive
market.” Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 13-14 (1984)
abrogated on other grounds by Ill. Tool Works Inc. v. Independent Ink, Inc., 547
U.S. 28 (2006). As it pertains to market power, the Court must determine if the
complained of restraint is unreasonable. The Supreme Court has held that:
Section 1 of the Sherman Act prohibits every contract, combination in
the form of trust or otherwise, or conspiracy, in restraint of trade or
commerce among the several States. This Court has long recognized
that, in view of the common law and the law in this country when the
Sherman Act was passed, the phrase ‘restraint of trade’ is best read to
mean ‘undue restraint.’ This Court’s precedents have thus understood
§ 1 to outlaw only unreasonable restraints.
Ohio v. Am. Express Co., 585 U.S. 529, 540 (2018) (emphasis in original) (internal
citation and quotations removed).
Determining if a restraint is unreasonable rests on either a per se rule or the
“rule of reason.” Nat’l Hockey League Players Ass’n v. Plymouth Whalers Hockey
13
Club, 419 F.3d 462, 469 (6th Cir. 2005). “Typically, ‘horizontal’ restraints––
restraints ‘imposed by agreement between competitors’–– qualify as unreasonable
per se.” Am. Express, 585 U.S. at 540-41 (quoting Bus. Elecs. Corp. v. Sharp
Elecs. Corp., 485 U.S. 717, 723 (1988)). “The rule of reason requires courts to
conduct a fact-specific assessment of ‘market power and market structure . . . to
assess the [restraint]’s actual effect’ on competition.” Id. (quoting Copperweld,
467 U.S. at 768).
Here, Ford complains of a per se violation. An analysis of market power is
not required. See Lie, 964 F.2d at 569 (6th Cir. 1992) (internal citation and
quotation omitted) (“The Court does not demand this inquiry into market power in
the presence of a naked restriction on price or output, and thus, does not allow
failure to prove market power to defeat a plaintiff’s antitrust action in such a
case.”); see also White Motor Co. v. U.S., 372 U.S. 253, 263 (1963) (“Horizontal
territorial limitations . . . are naked restraints of trade.”).
Additionally, Ford’s complaint pled market power despite not needing too.
(See ECF No. 23 at PageID. 519.) Therefore, Defendants’ argument that Ford
failed to adequately plead is without merit.
ii.
Anticompetitive Effect
The Court has found that Ford has adequately alleged a horizontal agreement
between parties, a per se violation of the Sherman Act, making an analysis into the
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anticompetitive effects of the agreement unnecessary. “Anticompetitive effect on
the market is necessary unless the action is found to be a per se violation of the
Sherman Act.” Found. For Interior Design Educ. Rsch. V. Savannah Coll. Of Art
and Design, 73 F. Supp. 2d 829, 835 (W.D. Mich. 1999) (citing Stratemore v.
Goodbody, 866 F.2d 189, 194 (6th Cir. 1989)). “If a court determines that a
practice is illegal per se, further examination of the practice’s impact on the market
or the procompetitive justifications for the practice is unnecessary for finding a
violation of antitrust law.” Expert Masonry, Inc. v. Boone Cnty., Ky., 440 F.3d
336, 342 (6th Cir. 2006) (internal citation omitted); see also Lie, 964 F.2d at 570
(“No one argues that [Plaintiff]’s case involves a per se violation of the antitrust
laws, making unnecessary an analysis of the anticompetitive effect of the
agreement at issue.”).
Here, Ford has adequately alleged a “horizontal agreement” amongst and
between Defendants which is a per se violation of the Sherman Act. “Certain
agreements, such as horizontal price fixing and market allocation, are thought so
inherently anticompetitive that each is illegal per se without inquiry into the harm
it has actually caused.” In re Cardizem, 332 F.3d at 907 (quoting Copperweld, 467
U.S. at 768); see also Hobart-Mayfield, 48 F.4th at 666 (quoting In re Cardizem,
332 F.3d at 906) (“If the per se rule is applicable then ‘no consideration is given to
the intent behind the restraint, to any claimed pro-competitive justifications, or to
15
the restraint’s actual effect on competition.’”). As a result, Ford need not allege an
anticompetitive effect from the agreement.
The complaint, therefore, does not fail to state a claim. Defendants,
however, argue that all of Plaintiff’s claim are time-barred by either the statute of
limitations or the laches doctrine.
C.
Time-Barred Claims
Pursuant to the Clayton Act, 15 U.S.C. § 15(a), private parties may bring
private actions for violation of the Sherman Act. Static Control Components, Inc.
v. Lexmark Intern., Inc., 697 F.3d 387, 401 (6th Cir. 2012). The controlling
section of the statute provides that “[a]ny action to enforce any cause of action
under section 15, 15a, or 15c of this title shall be forever barred unless commenced
within four years after the cause of action accrued.” 15 U.S.C. § 15b.
Defendants argue that Ford’s claims are time barred for four reasons: (1)
Ford’s blocked entry claim is barred by the statute of limitations; (2) the continuing
violation doctrine does not apply; (3) the laches doctrine bars injunctive relief; and
(4) Ford’s ASO claims were not contemplated until 2020. The Court will address
each in turn.
i.
Statute of Limitations and Continuing Violation
Defendants’ statute of limitations challenge is an affirmative defense that
must be set forth in response to a complaint. See Fed. R. Civ. P. 8(c)(1). A
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plaintiff need not plead around such affirmative defenses, and “a motion under
Rule 12(b)(6), which considers only the allegations in the complaint, is generally
an inappropriate vehicle for dismissing a claim based upon the statute of
limitations.” Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012).
However, dismissal under Rule 12(b)(6) is appropriate where “the allegations in
the complaint affirmatively show that the claim is time-barred.” Id. Here, it is
Ford’s burden to affirmatively “plead circumstances which would indicate why
[the events giving rise to a claim] w[ere] not discovered earlier” or “why the
statute [of limitations] should be tolled.” Auslender v. Energy Mgmt. Corp., 832
F.2d 354, 356 (6th Cir. 1987) (alterations added).
While Ford’s complaint does allege Defendants’ conduct “limit[s] the entry
of competitor health insurance companies into the market,” (see ECF No. 1 ¶ 120),
it also alleges a conspiracy to horizontally allocate territory and restrict output (id.
¶ 9). This alleged conspiracy resulted in Ford overpaying for healthcare services,
which, it argues, is an overt act.
“A cause of action accrues when a defendant commits an act that injures the
plaintiff’s business. Courts look to a defendant’s overt acts, rather than the effects
of those acts.” Re/Max Intern., Inc. v. Realty One, Inc., 173 F.3d 995, 1021 (6th
Cir. 1999) (internal citations omitted). “For statute of limitations purposes . . . the
focus is on the timing of the causes of injury, i.e., the defendant’s overt acts, as
17
opposed to the effects of the overt acts.” Peck v. General Motors Corp., 894 F.2d
844, 849 (6th Cir. 1990) (per curiam).
An overt act must be comprised of two elements: (1) it must be a new and
independent act that is not merely a reaffirmation of a previous act; and (2) it must
inflict new and accumulating injury on the plaintiff. DXS, Inc. v. Siemens Med.
Sys., Inc., 100 F.3d 462, 467 (6th Cir. 1996) (quoting Pace Indus., Inc. v. Three
Phoenix Co., 813 F.2d 234, 238 (9th Cir. 1987)). “Acts that simply reflect or
implement a prior refusal to deal or acts that are merely unabated inertial
consequences (of a single act) do not restart the statute of limitations.” Id. at 46768 (internal citations and quotations omitted); see Peck, 894 F.2d at 849 (holding
that conduct causing injuries that have a rippling effect into the future does not
constitute a continuing violation).
Ford has specifically argued that these violations are continuous. (ECF No.
23 at PageID. 523.) “A continuing antitrust violation is one in which the plaintiff’s
interests are repeatedly invaded.” DXS, Inc., 100 F.3d at 467 (citing Peck, 894
F.2d at 849). “When a continuous antitrust violation is alleged, a cause of action
accrues each time a plaintiff is injured by an act of the defendants.” Barnosky Oils,
Inc. v. Union Oil Co. of Cal., 665 F.2d 74, 82 (6th Cir. 1981). Further, “when a
plaintiff alleges a continuing violation, an overt act by the defendant is required to
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restart the statute of limitations and the statute runs from the last overt act.” Peck,
894 F.2d at 849 (quoting Pace Indus., Inc., 813 F.2d at 237).
Accepting these allegations as true, as the Court is required to do for the
purposes of these motions, Ford has adequately pled a continuous violation of an
overt act. Ford has alleged that Defendants’ conspiracy resulted in it paying a
supra-competitive, or unreasonably high, premium and fee. As a result, each
allegedly wrongful payment would constitute a new cause of action. See GEICO
Corp. v. Autoliv, Inc., 345 F. Supp. 3d 799, 837 (E.D. Mich. 2018) (“Defendants
committed an overt act in furtherance of the conspirac[y] each time they sold an
Auto Part to an OEM”); see also In re Se. Milk, 555 F. Supp. 2d at 937 (finding a
continuing conspiracy based on the annual renewal of full supply agreements).
Ford claims that these payments occur on a monthly basis. (ECF No. 1 ¶ 122.)
Therefore, Ford’s claims of paying higher premiums as a result of the alleged
conspiracy are not barred by the statute of limitations, as they would restart after
each new payment.
ii.
ASO Claims
Turning to Ford’s ASO claims, Defendants claim that Ford raised these
claims for the first time on November 2, 2020 as part of its Fourth Amended
Complaint in its In re Blue Cross Blue Shield Antitrust Litig., 2:13-CV-20000-RDP
19
(N.D. Ala.). They further state that all of Ford’s ASO claims should be limited to
the four years prior to them being first raised on November 2, 2020.
Ford argues that these claims were raised for the first time in a separate
MDL case in the Western District of North Carolina, styled as Cerven v. Blue
Cross Blue Shield of N.C., No. 5:12-cv-00017 (W.D.N.C.), which was transferred
to the Northern District of Alabama, and similarly styled as Cerven v. Blue Cross
Blue Shield of N.C., No. 2:12-cv-04169 (N.D. Ala.). It further argues that it should
be given the benefit of class action tolling as proscribed by the Supreme Court in
American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), from the date of
the 2012 Cerven complaint, allowing its ASO claims from 2008 to be litigated.
“[T]he commencement of a class action suspends the applicable statute of
limitations as to all asserted members of the class who would have been parties had
the suit been permitted to continue as a class action.” Am. Pipe & Constr. Co. v.
Utah, 414 U.S. 538, 554 (1974). Once the class action is filed, the statute of
limitations remains tolled until class certification is denied. Crown, Cork & Seal
Co. v. Parker, 462 U.S. 345, 354 (1983). In addition, the statute of limitations is
tolled only for those claims for which the defendant received notice in the original
class action. Id. at 355 (Powell, J. concurring) (“Claims as to which the defendant
was not fairly placed on notice by the class suit are not protected under American
Pipe and are barred by the statute of limitations.”).
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“However, the first step is to determine whether [plaintiff]’s claims were
part of the original class definition . . . and thereby benefit from American Pipe
tolling.” Machesney v. Ramsgate Ins., Inc., No. 13-11804, 2014 WL 2605479, at
*3 (E.D. Mich. June 10, 2014). The Cerven complaint defined the proposed class
as follows:
All persons or entities who, from February 7, 2008 to the present (the
“Class Period”) have paid health insurance premiums to BCBS-NC for
individual or small group full-service commercial health insurance.
(ECF No. 23-2, PageID. 543 ¶ 22.) The Cerven complaint went on to define
differences between full-service, single-service, and ASO products:
Full-service versus single-service health insurance: Full-service health
insurance provides coverage for a wide range of medical and surgical
services provided by hospitals, physicians, and other health care
providers. In contrast, single-service health insurance provides narrow
coverage restricted to a specific type of health care, e.g., dental care.
Single-service health insurance is sold as a compliment to full-service
health insurance when the latter excludes from coverage a specific type
of health care, e.g., dental care. Thus, full-service health insurance and
single-service health insurance are not substitutes.
*
*
*
Fully-insured health insurance versus ASO products: When a consumer
purchases a fully-insured health insurance product, the entity from
which the consumer purchases that product provides a number of
services: it pays its enrollees’ medical costs, bears the risk that its
enrollees’ health care claims will exceed its anticipated losses, controls
benefit structure and coverage decisions, and provides “administrative
services” to its enrollees, e.g., processes medical bills and negotiates
discounted prices with providers. In contrast, when a consumer
purchases an administrative services only (“ASO”) product, sometimes
known as “no risk,” the entity from which the consumer purchases that
21
product provides administrative services only. Therefore, fully-insured
health insurance products and ASO products are only substitutes for
those consumers able to self-insure, i.e., able to pay their own medical
costs and bear the risk that claims will exceed their anticipated losses.
(Id. ¶¶ 127, 129) (emphasis in original). Here, the proposed class definition sought
to include only those who purchased “full-service” commercial health insurance,
not “administrative services only” products. Therefore, Ford’s ASO claims were
not included in the class definition for which it seeks tolling.
Ford’s argument that conduct during discovery shows that litigation
contemplated ASO claims is unconvincing. It does not provide any legal support
for this conclusion. Further, the Alabama MDL court in In re Blue Cross Blue
Shield Antitrust Litig., reached the same conclusion, holding:
The Cerven complaint plainly did not contemplate ASOs being part of
that case or the relevant class. ‘[T]he critical issue in Rule 15(c)
determinations is whether the original complaint gave notice to the
defendant of the claim now being asserted.’ The Cerven complaint
simply gave no notice to Defendants whatsoever that they would have
to defend against alleged misconduct in the ASO market. So, ASOs
cannot get the benefit of the Cerven filing date.
In re Blue Cross Blue Shield Antitrust Litig., 2:13-cv-20000-RDP, 2022 WL
4587618, at *31 (N.D. Ala. Aug. 9, 2022) (internal citation and quotation omitted),
aff’d 85 F.4th 1070 (11th Cir. 2023).
Ford’s claims for antitrust violations related to ASOs were not a part of the
original class definition for which it now seeks relief and therefore cannot benefit
from American Pipe tolling. As a result, Ford’s claims related to ASOs are barred
22
by the statute of limitations. The Fourth Amended Complaint, however, clearly
intended for ASOs to be included and claims four years prior to that will be tolled.
Defendants concede this point. (ECF No. 20 at PageID. 481.) The Fourth
Amended Complaint asserted claims against Defendant BCBSM related to ASO
products. The same claims that Ford asserts against it now. Ford designated a
class member to be a part of the MDL before opting out of the proposed settlement
to pursue their own claims. (ECF No. 1 ¶ 6.) Class action tolling therefore
applies.
iii.
Injunctive Relief Claims
Lastly, turning to Ford’s injunctive relief claims, Defendants argue that they
are barred by the laches doctrine. In this circuit, laches is a negligent and
unintentional failure to protect one’s rights. United States v. City of Loveland, 621
F.3d 465, 473 (6th Cir. 2010). “A party asserting laches must show: (1) lack of
diligence by the party against whom the defense is asserted, and (2) prejudice to
the party asserting it.” Id. (quoting Herman Miller, Inc. v. Palazzetti Imps. &
Exps., Inc., 270 F.3d 298, 320 (6th Cir. 2001)). However, “if the statute of
limitation has not elapsed, there is a strong presumption that plaintiff’s delay in
bringing the suit . . . is reasonable. Only rarely should laches bar a case before the
. . . statute has run.” Chirco v. Crosswinds Communities, Inc., 474 F.3d 227, 233
(6th Cir. 2007) (citations and quotation marks omitted). The Court has previously
23
found that the statute of limitations on Ford’s claims has not elapsed. Therefore,
any delay by Ford is likely reasonable.
Further, Defendants misapply the prejudice prong of the laches doctrine.
They argue that they would be prejudiced if equitable relief is awarded now, given
the business decisions they have made in reliance on their ESAs. (ECF No. 19 at
PageID. 404.) The prejudice prong of the laches doctrine refers to prejudice in
producing a defense to a claim as a result of delay. See MGA, Inc. v. Centri-Spray
Corp., 639 F. Supp. 1238, 1242 (E.D. Mich. 1986) (emphasis added) (“A
plaintiff’s claim is barred by laches if he delays enforcing his rights for an
unreasonable amount of time and the defendant has been materially prejudiced
by the delay[]”); see also Cleveland Newspaper Guild, Local 1 v. Plain Dealer
Pub. Co., 839 F.2d 1147, 1162 (6th Cir. 1988) (Milburn, J. dissenting) (“The
prejudice prong of the laches analysis requires a showing that the defendant’s
chances of success have been diminished by loss of evidence or unavailability of
witnesses.”)
Defendants have not made a showing that the laches doctrine applies in this
matter. The Court finds that Ford’s claims for injunctive relief are not barred by
the laches doctrine.
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IV.
Conclusion
Accordingly, Ford’s complaint does not fail to state a claim for a violation of
§ 1 of the Sherman Act as it relates to its claims arising from the purchase of health
insurance products. However, Ford’s claims related to the purchase of ASO
products not identified in its Fourth Amended Complaint in the Alabama MDL, In
re Blue Cross Blue Shield Antitrust Litig., 2:13-CV-20000-RDP (N.D. Ala.), are
barred by the statute of limitations, as those claims were not contemplated by the
Cerven complaint.
IT IS ORDERED that Defendants’ Motions to Dismiss Under Rule
12(b)(6) (ECF Nos. 19-20) is GRANTED in part and DENIED in part.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: March 30, 2024
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